The Life Insurance Code Compliance Committee’s report into insurers’ compliance with the code over the 2019 financial year found that the corporate culture of “many” insurers appeared not to align with the code.
“The effectiveness of [code] subscribers’ staff training programs and monitoring frameworks is questionable, as evidenced by the large volume of breaches caused by human error,” the committee said.
The report also pointed to the fact that insurers lacked sufficient processes for reporting breaches of the code relating to claims decisions time frames, and that claims-related complaints and claims handling time frames had increased.
Committee chair Anne Brown specifically called out the poor data provided by insurers in remarks released alongside the report, saying this had made the information gathering process extremely difficult for the committee.
“The committee’s intention was to publish a report that would provide meaningful insights into how subscribers have improved their code compliance since the code came into formal operation in 2017. Unfortunately, inconsistencies in the content and quality of last year’s data and its collation has not enabled this to happen,” Ms Brown said.
“Self-regulation is a privilege. With that privilege comes an obligation to ensure that appropriate mechanisms are in place to comply with the code and report, via complete and accurate quantitative data, both internally and externally.”
FSC chief executive Sally Loane sought to downplay the findings of the report, saying insurers had already taken steps to improve and that the code was still in its early days.
“The 2018-19 report reflects results from the code’s second year in existence and we are confident the industry is undertaking determined steps to improve the way it delivers services to customers,” Ms Loane said.
“We note examples where industry has improved markedly in the past 12 months, including investing $600 million in new systems, including claims management systems that have code monitoring and reporting embedded in them.”
Can’t see Sally Loane being around too much longer. The insurer CEO’s are going to need a scape goat pretty soon to cover up their crooked behavior.
I was recently dealing with a claim and advised the claims manager that he had breached the code timescales twice. He wasn’t aware of them and didn’t care anyway. I thought about complaining to the FSC but what would be the point? They would do nothing. Not a single FSC member has ever had any financial re-course from breaching the code, so what is the point of the code when its not enforceable?
The insurers need to be government regulated and the sorry FSC need to pack their bags and disappear.
The word here is anti-selection. A strategy often seen by medical schemes when a section of their membership decide that the cost of staying on the medical scheme does not represent fair value. In other words it’s too expensive, they feel they are healthy and less likely to claim and so they self-insure. The members who are living a lifestyle that is less healthy or who are more likely to claim because of medical history continue to pay the increased premiums. In essence, the healthy are no longer subsidising the unhealthy. This adds additional strain to the expenses of the medical scheme and the scheme has to raise premiums again to remain viable and so the spiral of death of the scheme speeds up. Of course, the same applies to our FSC life insurers. However, they are trying the ‘scammers logic’ believing if you have invested money that you cannot recover that you are more likely to continue to throw money at them ‘hoping against hope’ that at some point you might see value for your payments. We all know that the scammers don’t simply return the victims money. With our ‘clever’ insurers they simply keep increasing premiums until they price us out of the market and our premiums paid represent a windfall profit since we are now unable to claim since we are no longer covered. Tell me I am wrong Sally Loane…I dare you.
wow, i echo the sentiments of all the contributors, the industry needs a tax payer funded authority. I have being saying this for a long time.
All insurers have increased premiums markedly over the past 12 months, and reduced new business premiums to cope with the outflux this is not a sustainable business plan and you dont need to be the head of the fsc to see that. Why not price new business where its profitable? The insurers cry poor so where’s the money for the new systems coming from? The insurers have broken many promises to clients, the big one being increasing level premiums whilst at the same time offering discounts that lead to lapses, ie 10% first year 5% second year. Its basically a ponzi scheme that is falling over. Bunch of crooks
Try the last 2.5 years mate. The first round of increases started by the insurers as soon as the LIF was passed and most insurers have had between 3 to 6 separate increases since 2018. They state this is because of poor claims experience but as you said they are still able to discount new business premiums for the same products. I agree with you its a ponzi scheme and completely crooked.
Quell Surprize ! Some insurers are breaching 8.5 of that useless, un-enforceable, CODE by asking Claimants to provide COMPLETE MEDICAL FILES. The FSC is a paper mache PR machine pretending to control insurers. I call BS !
I’d be surprised if they get a slap on the wrist. If this was an adviser though different story….
Self regulation is a privilege…..I see where this is headed !!
Sally Loane didn’t understand what commissions were last year and should go… the insurance companies are paying big commissions to the super funds for allow them to sell junk insurance
…and this is surprising…how?